Babson Capital Management and Norfolk Management Group created a joint venture, Wood Creek Capital Management, to incubate "emerging hedge funds in non-traditional asset classes," the companies announced today in a news release. The joint venture's first fund, Wood Creek Venture Fund, will invest in alternatives managers in niche strategies, such as intellectual property rights and trade-finance obligations, said Steve Staggs, a managing director responsible for Babson's alternative investment efforts. Brett D. Hellerman, Norfolk's CEO, will also serve as CEO of Wood Creek Capital Management. The venture will look to close its first investment in early fall, and its second by the end of the year, Mr. Hellerman said. Mr. Staggs said the joint venture should prove "very complementary" to Babson's own hedge fund operations, which focus on more traditional fixed-income and equity asset classes. Mr. Hellerman said the move into direct investments is logical for Norfolk Management as well, building on its investment banking and placement agent activities. Mr. Staggs would not give further details of the stakes Babson and Norfolk hold in the joint venture. Mr. Hellerman said Wood Creek will look to nurture niche hedge fund companies that can stand on their own, expanding the "opportunity set" of products that institutional investors can tap.